Ice cream set to cost more on higher tax

AHMEDABAD: Be ready to shell out more for ice creams from this weekend. With the introduction of a 1% excise duty on ice cream in the 2011-12 budget, the industry thinks the prices have to be increased by 5%. A few ice cream manufacturers who are keen on not losing their market share are lowering the quantity.

“In April, we will be increasing ice cream prices by 3%. This will be the second increase in prices this year. The price change will be for 90 of the 250 products we have,” said Vadilal Industries managing director Rajesh Gandhi. The second largest ice cream brand manufacturer in the country raised prices by 7% as recently as February citing an increase in milk prices.

Similarly, Gujarat-based ice cream manufacturer Havmor is expected to increase the prices of all categories and flavours by 5% to 7% in the first week of April. “We have old stock and once it is consumed, we will bring the new rate in the market,” said Havmor managing director Pradeep Chona. Market leader Gujarat Cooperative Milk Marketing Federation (GCMMF), which markets the Amul brand, is not expected to increase prices this time. “We increased prices across all categories in March by 10% to 12% and won’t be doing so again,” said GCMMF managing director RS Sodhi.

Realising that an increase in prices might not go well with consumers, manufacturers are also ensuring that prices remain the same even as they reduce the size of the products. “We saw the sales of our mini chocobar fall by 30% when we increased the cost by Rs 1 to Rs 6 this month. We have now reduced the quantity by 15 ml to 20 ml and priced the product at the magic figure of Rs 5,” said Chona.